Coffee prices in the domestic market and on the trading floor picked up in the first week of this year, marking a good start for the industry.
Year begins with a bang
Prices in all markets increased with coffee bean prices in the Central Highlands exceeding VND39,000 a kilo, versus VND38,500 in the preceding week.
However, exporters described the current prices in the local market as “uncertain”. A number of sales agents are willing to buy coffee at VND500-1,000 per kilo higher, while many exporters, including joint ventures with foreign stakes, make perfunctory purchases as they cannot compete with sales agents.
An exporter in Pleiku City, Gia Lai said his company could not compete with sales agents in purchase prices since they bought at high prices and sold at low prices to several enterprises through well-calculated VAT invoices aimed to evade tax obligations.
Similarly, an exporter in Dong Nai said he had refused to buy coffee from many decent traders because the prices they quoted were much higher than the prices of some sales agents that avoided tax through invoice issuance tips. He reconciled himself to buy coffee from the indecent sales agents, as their cheap prices make it easier to sell goods.
“If buying from the righteous ones, we would hardly find outlets when export prices are quite ‘dignified’. As such, domestic prices are in a very dangerous situation, manipulated by fraudulent traders, which can be detrimental to exports,” he lamented.
Export offer prices of the 2.5% broken black coffee were quite stable, standing at US$30-40 per ton, equivalent to the levels in late 2012. This type of coffee often serves as a basis for comparison with other types, so a lot of industry outsiders mistakenly believe that Vietnam’s coffee export prices always have a price differential from the listed prices.
If other types of coffee have better quality than the 2.5% broken black coffee, their export prices will often be higher than the prices listed on the trading floor NYSE Liffe; but if they have worse quality, their prices will be lower than the reference price.
At present, even the normal coffee types have higher prices than those listed on the trading floor. In addition, prices of high-quality types such as black, unbroken, polished and semi-processed coffee are now much higher than the trading floor levels.
Trading floor prices contrary
Prices on the Robusta coffee trading floor NYSE Liffe London remained contrary last week, when delivery time officially came. However, January prices continued to stay higher than the levels in March, which has become the main trading month.
At present, only firms with goods available at their warehouses and designated by NYSE Liffe can bring their goods to the trading floor for delivery in January with listed prices at US$50 per ton higher than March prices.
In normal conditions, prices in the months of late delivery (March 2013) are higher than those in the months of prompt delivery (January 2013). The price difference is attributed to storage costs for goods owners.
Therefore, when prices are contrary, owners often bring their goods to the warehouses selected by the trading floor to go through quality verification and to sell coffee to the floor when convenient.
Thanks to contrary prices, the inventory volume of coffee certified by NYSE Liffe increased after a long period of decline. The latest report of the trading floor shows that as of December 24, 2012, the unsold volume of Robusta coffee had risen by 1,400 tons to 106,540 tons.
Last Friday, the closing price on NYSE Liffe reached US$1,948 per ton for goods to be delivered in March, US$37 higher than the preceding week. However, because of contrary prices, March prices were some US$49 lower than January prices.
The Saigon Times Daily